EFFECT OF DEBT CONTRACTS NEGOTIATION TOWARD COMPANY TO PERFORM REVALUATION OF FIXED ASSETS AND ITS IMPLICATIONS TOWARD INCOME TAX EXPENSE
No Thumbnail Available
Date
2013-06-28
Journal Title
Journal ISSN
Volume Title
Publisher
International Conference on Business and Social Sciences, International Sysposium on Education, Psycology, Society and Tourism, International Conference on Business and Social Sciences
Abstract
The purpose of this study was to empirically test the effect of negotiating debt contracts (through the level of leverage, the level of secured borrowings and decrease in cash flow from operating activities) as well as the company size against the company on administering the revaluation of fixed asset and the implication on income tax expense. The population of this study focused on the companies that were listed in Indonesian Stock Exchange in 2010. Based on this list, there were 5 companies that administered the revaluation on fixed assets in 2010. As for the companies that did not administer the revaluation of fixed assets, the researcher processed all samples with purposive sampling method. Furthermore, this research also used the secondary data obtained from the Indonesian Stock Exchange. Statistical tests performed used the logistic regression analysis and simple linear regression analysis.The result of the study showed that the level of leverage and the company size had a positive and significant effect on the rate of 10% of the company to administer the revaluation of fixed assets. On the contrary, the level of secured borrowings had a negative and insignificant effect for the company to administer the revaluation of fixed assets although it was originally predicted to be positive. The study also discovered that the decrease in cash flow from operating activities had a positive and insignificant effect for the company to administer the revaluation of fixed assets which overlooked the original prediction to be negative. Revaluation of fixed assets resulted in increased amount of depreciation expense over the useful life of assets, which in turn will reduce taxable income and income tax expense.
Description
Keywords
Revaluation of fixed assets, negotiating of debt contracts, level of leverage, level of secured debt borrowings, decrease in cash flow from operating activities, company size, income tax expense